question archive Consider the Gordon Growth Model for pricing equities and the formula for pricing discount bonds
Consider the Gordon Growth Model for pricing equities and the formula for pricing discount bonds
Subject:FinancePrice:2.86 Bought3
Consider the Gordon Growth Model for pricing equities and the formula for pricing discount bonds.
You hold a share that has the following information:
- Dividend: £2
- Required return: 5%
As well as a bond with the following information:
- Face value: £105
- Market interest rate: 5%
- Maturity: 1 year
At what growth rate for the share would you be indifferent between these two securities?
a. 4%
b. 5%
c. 7%.
d. 6%.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
The answer is a 4% as value above 4 like 5% which give a vague answer anf 7% & 6% we will negative share price
